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Local authorities with Arms Length Management Organisations must be allowed more financial freedoms if ALMOs are to...
Local authorities with Arms Length Management Organisations must be allowed more financial freedoms if ALMOs are to continue beyond the delivery of the decent homes programme, says a new report.

At present 49 ALMOs manage some 740,000 homes through temporary contracts with local councils, but face an uncertain future once the decent homes programme has been completed. With tenant satisfaction levels for ALMOs running much higher than for council housing, many authorities and tenants would prefer them to make a long-term contribution to shaping the way council housing is run.

ALMOs - a new future for council housing is published by the National Federation of ALMOs, the Chartered Institute of Housing and HouseMark. A key message is that if ALMOs are to play a role beyond decent homes delivery then their finances will need to be self-sufficient and fundable from their rental income. The current system is too cumbersome and unpredictable to give them a sound basis for the future.

The report outlines four options for 'breaking the link' between the council's HRA and the national HRA subsidy system that will allow ALMOs to become more flexible and sustainable organisations:

Option 1a: Self-sufficient HRA controlled by local authority - with sufficient investment to maintain the housing at the Decent Homes Standard in the future.

Option 1b: Self-sufficient HRA controlled by local authority - as above, but also with sufficient investment to deliver long-term sustainability, including environmental and community works.

Option 2: Self-sufficient HRA managed by ALMO - with the HRA debt becoming ALMO debt, secured on the ALMO's income, but still within public sector borrowing controls. A longer contract period for the management agreement would be required. The local authority would be the regulator and exercise control through the management agreement.

Option 3: Self-sufficient HRA managed by an ALMO - no longer majority local authority owned. The ALMO could be 'community owned' with a strong stake for tenants and a less than 50% share for the council. The local authority would manage the HRA through a long-term service contract with the ALMO. Borrowing would be outside public expenditure controls and off the balance sheet of the authority.

The new report report is an interim paper on a fuller research project which will be published in the near future.

Dennis Rees, chair of the National Federation of ALMOs, said:

'The three organisations have put forward carefully-developed options for the long-term future of ALMOs, which we want the government and local authorities to consider in detail. We know that any changes have to be made in partnership between councils and tenants, and we would like the next government to decide quickly on a 'menu' of options that can be considered. This report sets out such as menu.'

Joanne Roney, CIH council member (and executive director of neighbourhoods, Sheffield City Council) said:

'It is vital for local authorities to know what the future potential for ALMOs is beyond the investment they are making in decent homes. There is a massive agenda of creating decent neighbourhoods and sustainable communities. Local councils will want ALMOs to play a full role in this, with other local partners, but are aware that they can only do this if they can command sufficient finance over the longer term.'

The report is available here.

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